To begin with the basics, Facebook will have to file an application—called a “Hart-Scott-Rodino filing—for approval of the acquisition with the Federal Trade Commission and the antitrust division of the Justice Department.

The Clayton Act, a key piece of antitrust legislation dating back to 1914, requires all acquisitions that meet or exceed regulatory thresholds to notify regulators and put the deal on hold while regulators review it for possible violations of competition laws. The threshold levels vary depending on the size of the buyer and the acquired company. But all deals that result in a company with combined assets of over $272.8 million exceed the threshold. Facebook’s acquisition of Instagram obviously surpasses the required filing threshold.

Antitrust experts I spoke with say the main red flag for the deal may be the price Facebook agreed to pay. The government's official merger guidelines, which were revised by the FTC and the Justice Department in 2010, make it clear that large purchase price premiums can raise the possibility that a deal will be viewed to have anticompetitive effects.

“The financial terms of the transaction may also be informative regarding competitive effects. For example, a purchase price in excess of the acquired firm’s stand-alone market value may indicate that the acquiring firm is paying a premium because it expects to be able to reduce competition or to achieve efficiencies,” the guidelines explain. (See section 2.2.1)

Reporting on the background of the Instagram deal suggests that some of Facebook’s motivation for the deal could be construed as anticompetitive.

Here's how a couple different sources explain Facebook's thinking: Last Tuesday, more than 1 million people download Instagram's new Android app on its first day of availability. Facebook begins to get nervous that a social-sharing company like Instagram is able to migrate from iOS to Android so seamlessly. Then comes word that Instagram has raised $50 million in new funding from deep-pocketed investors like Sequoia Capital and Greylock Partners. In other words, Facebook may have a challenger.

"I think Facebook panicked," says one observer. "So it decided to take out the competition before it had a chance to grow even bigger."

And, unlike most other companies, Facebook has the resources and streamlined organizational structure to put together such a deal on short notice.

In other words, Instagram didn't make a mistake accepting VC funding/dilution just days before agreeing to be acquired. Instead, it may be getting acquired, in part, because it accepted the new funding.

[Facebook] wants to keep Instagram’s 30 million iPhone and 1 million plus Android users from leaving its platform. And perhaps more importantly, it wants to keep mobile users from leaving for Google and Apple. Wedbush Securities Managing Director Michael Pachter says “It’s clear that Instagram’s technology is superior and its growth posted both a threat and an opportunity to Facebook.”

If regulators at the FTC and Justice get wind of this narrative, they are likely to scrutinize the deal a bit more closely.

What’s more, Mark Zuckerberg’s promise of “building and growing Instagram independently” could be read as a sign that the company does not see many synergies between the businesses and instead was merely seeking to fend off a potential competitor.

Several factors, however, will work in Facebook’s favor. In the first place, it is very tough to make an antitrust case based on a theory of potential competition. Despite its 31 million users, Instagram may simply be too small to count as a serious competitor for Facebook.

Justice and the FTC are also aware that the internet is a dynamic and competitive space where low barriers to entry limit the effectiveness of anticompetitive acquisition strategies. Instagram itself is only 2 years old. It’s very possible that the next big thing in photosharing is being developed somewhere at a desk in Silicon Alley right now.

The presence of Google (with Picassa and Google +) , Apple (iPhoto) , and Yahoo (Flickr) in the social photography space may also help fend off regulators. Can Facebook really be accused of acting anticompetitively with these giants in the market?

Finally, it may be hard to find any harm to consumers here. The ultimate purpose of antitrust laws is to protect consumers. With Mark Zuckerberg promising to keep Instagram open to other social networking platforms, it may be difficult to make out a case that consumers are harmed by the acquisition in any way.

The sticking point is likely to be price. Facebook is paying $1 billion for a company that doesn’t make any money and that produces a service—photosharing—that Facebook is already dominating. Regulators may wonder if there’s a monopoly premium priced into the deal.